Skip to main content Global Metals and Mining Conference – Teck Resources Limited Investor Presentation | Shale Experts
Loading...
Pm

Global Metals and Mining Conference – Teck Resources Limited

Teck Resources Limited · Feb 24, 2015 · 80 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Global Metals and Mining Conference – Teck Resources Limited – slide 1
    February 24, 2015
  2. Global Metals and Mining Conference – Teck Resources Limited – slide 2
    Agenda Teck Overview Commodity Market Observations Teck Update 4
  3. Global Metals and Mining Conference – Teck Resources Limited – slide 3
    About Us Canadas Largest Diversified Natural Resources Company 1 Producer of steelmaking coal in North America Top ten copper miner in the 2 Seaborne exporter of Americas steelmaking coal globally 3 zinc miner in the Building…
  4. Global Metals and Mining Conference – Teck Resources Limited – slide 4
    Attractive Portfolio Of Long-Life Assets & Resources Focused on the Americas & Low Risk, Stable Jurisdictions Strong Resource Position With Sustainable Long-Life Assets Coal Resources 100 years Copper Resources 30 years Zinc…
  5. Global Metals and Mining Conference – Teck Resources Limited – slide 5
    The Value of Our Diversified Business Model Cash Operating Profit 2014 2015 Leverage to Strong Commodities Production Unit of Estimated Estimated Guidance1 Change Profit 2 EBITDA2 Coal 27 Mt US1/tonne 21M /1 32M /1 Base Copper…
  6. Global Metals and Mining Conference – Teck Resources Limited – slide 6
    Agenda Teck Overview Commodity Market Observations Teck Update 8
  7. Global Metals and Mining Conference – Teck Resources Limited – slide 7
    Chinas Growth: Less is More In absolute terms, Chinas GDP growth is approximately double that of 10 years ago GDP Increment at 2005 Constant Prices in RMB 3,500 15% Incremental GDP in 2015 is 3,000 13% expected to be similar to…
  8. Global Metals and Mining Conference – Teck Resources Limited – slide 8
    Met Coal Market Rebalancing; Higher Prices in C Terms Coal Prices By Currency Argus FOB Australia 30 Mt cutbacks announced, slowly 160 being implemented 150 Require additional cutbacks to AUS 140 achieve market balance /…
  9. Global Metals and Mining Conference – Teck Resources Limited – slide 9
    Copper Surplus Forecast Declining Wood Mackenzie Forecast Wood Mackenzie Forecast Refined Copper Surplus 2014 Refined Copper Surplus 2015 900 900 800 800 700 700 600 600 Thousand Tonnes Thousand Tonnes 500 500 400…
  10. Global Metals and Mining Conference – Teck Resources Limited – slide 10
    Zinc Inventories Declining LME Zinc Stocks - 11 Years LME Zinc Stocks Since Dec 2012 120 250 1,400 1,200 1,200 100 1,100 200 1,000 80 1,000 thousand tonnes 150 thousand tonnes 800 900 60 US/lb US/lb 100 600…
  11. Global Metals and Mining Conference – Teck Resources Limited – slide 11
    Declining Drilling Activity Will Impact Oil Production North American Weekly Oil Rig Count 2,000 Down Surge in supply last 5 563 rigs or 35% years primarily due to in twelve weeks US shale oil Shale oil field decline Oil…
  12. Global Metals and Mining Conference – Teck Resources Limited – slide 12
    Agenda Teck Overview Commodity Market Observations Teck Update 14
  13. Global Metals and Mining Conference – Teck Resources Limited – slide 13
    Controlling the Controllables Solid performance met or exceeded guidance - Record coal production - Record throughput at Antamina - Record zinc production at Red Dog Significantly reduced controllable operating costs and planned…
  14. Global Metals and Mining Conference – Teck Resources Limited – slide 14
    Delivering Results in Cost Management Copper Cash Costs1 Steelmaking Coal All-In Site Costs 2.50 80 76 2.08 69 70 2.00 1.80 19 60 18 1.50 1.50 50 US/lb net of 40 C/t 1.00 by- 30 57 product 51 0.50 credits 20 10…
  15. Global Metals and Mining Conference – Teck Resources Limited – slide 15
    Fort Hills Economics Robust1 70 WTI & 90 WTI & Fort Hills Free Cash Flow Yield4 Potential Contribution 0.80 0.90 from Fort Hills CAD/USD CAD/USD Sensitivity to WTI Price 25% Tecks share of annual production 13 Mbpa 13 Mbpa…
  16. Global Metals and Mining Conference – Teck Resources Limited – slide 16
    Strong Balance Sheet & Liquidity Liquidity of C5B, including C2B cash and undrawn US3B line of credit Investment Grade Rating Debt-to-debt-plus-equity of 31% 3,000 US300M of notes due to end of 2016 Weighted average maturity 14…
  17. Global Metals and Mining Conference – Teck Resources Limited – slide 17
    Fort Hills Capex Well Supported By Free Cash Flow & Liquidity Effect of Disclosed Sensitivities 2014A Estimated On Free Cash Flow2 (before Fort Hills Capex)1 Sensitivity 2014A Current3 to Spot EBITDA1 1600 CAD/USD 1.10 1.25 0.15…
  18. Global Metals and Mining Conference – Teck Resources Limited – slide 18
    Summary Attractive portfolio of long-life assets & resources Good leverage to strong zinc & copper markets Executing well & controlling the controllables Solid financial position Investment grade credit rating 20
  19. Global Metals and Mining Conference – Teck Resources Limited – slide 19
    February 24, 2015
  20. Global Metals and Mining Conference – Teck Resources Limited – slide 20
    Additional Information
  21. Global Metals and Mining Conference – Teck Resources Limited – slide 21
    Diversified Global Customer Base China North 26% America Europe 20% 18% Asia excl. China 33% Latin America 3% Diversified Portfolio of Key Commodities Coking coal Zinc Moly Germanium Copper Lead Silver Indium 23…
  22. Global Metals and Mining Conference – Teck Resources Limited – slide 22
    Solid Delivery Against 2014 Guidance Original Guidance Actual Results Steelmaking Coal Coal production 2627 Mt 26.7 Mt Record coal production Coal site costs C55-60 /t C54 /t1 Coal transportation costs C38-42 /t C38 /t Combined…
  23. Global Metals and Mining Conference – Teck Resources Limited – slide 23
    2015 Production & Site Cost Guidance Actual 2014 2015 Guidance Steelmaking Coal Coal production 26.7 Mt 26.5-27.5 Mt Coal site costs C54 /t1 C49-53 /t Coal transportation costs C38 /t C37-40 /t Combined coal costs C92 /t C86-93…
  24. Global Metals and Mining Conference – Teck Resources Limited – slide 24
    2015 Capital Expenditures Guidance Major New Mine Capitalized (M) Sustaining Enhancement Development Sub-total Stripping Total Coal 100 45 - 145 490 635 Copper 200 15 105 320 225 545 Zinc 180 - - 180 60 240 Energy - - 910 910 - 910…
  25. Global Metals and Mining Conference – Teck Resources Limited – slide 25
    Significant Benefits from Low Oil Prices Low oil price benefits Teck overall in the near-term Reduces operating costs by hundreds of millions of dollars annually1 Accompanied weaker Canadian dollar improves EBITDA by hundreds of…
  26. Global Metals and Mining Conference – Teck Resources Limited – slide 26
    Collective Agreements Operation Expiry Dates Line Creek In Negotiations - May 31, 2014 Coal Mountain In Negotiations - December 31, 2014 Antamina July 23, 2015 September 30, 2015 Carmen de Andacollo December 31, 2015 Elkview…
  27. Global Metals and Mining Conference – Teck Resources Limited – slide 27
    Share Structure & Principal Shareholders Teck Resources Limited March 3, 2014 Shares Held Percent Voting Rights Class A Shareholdings Temagami Mining Company Limited 4,300,000 45.97% 28.62% SMM Resources Inc (Sumitomo) 1,469,000…
  28. Global Metals and Mining Conference – Teck Resources Limited – slide 28
    Family-Controlled Public Issuers Common corporate structure in Cumulative Average Growth Rate Canada May not confirm to typical governance expectations, but can still have strong governance practices Family-controlled issuers…
  29. Global Metals and Mining Conference – Teck Resources Limited – slide 29
    Family-Controlled Public Issuers; Teck Share Price Performance Teck has been a strong Long-term investments in Teck have investment in recent years outperformed non-family and materials firms Source: The Impact of Family Control…
  30. Global Metals and Mining Conference – Teck Resources Limited – slide 30
    Returned Cash To Shareholders Annualized Dividend Payout Aim to pay a sustainable dividend that 0.90 0.80 grows commensurate with growth in 0.70 earnings and cash flow 0.60 0.50 - Since January 2013, semi-annual 0.40 payment of…
  31. Global Metals and Mining Conference – Teck Resources Limited – slide 31
    Economic Outlook
  32. Global Metals and Mining Conference – Teck Resources Limited – slide 32
    Substantial Economic Growth Requires Decades to Achieve Per Capita GDP Relative to the US at PPP % Chinas GDP is 20% of the 100 USs on a per capital basis Japan 90 80 70 60 Korea 50 40 30 20 China 10 0 1953 1958…
  33. Global Metals and Mining Conference – Teck Resources Limited – slide 33
    Substantial Potential For Continuous Robust Growth in China 20-Year Period Average Annual GDP Beginning When Countrys Growth Rate Country Per Capital GDP Was 21% of USs Over a 20-Year Period Japan 1951-1971 9.2 Singapore…
  34. Global Metals and Mining Conference – Teck Resources Limited – slide 34
    Room for Further Development in China Per Capita GDP, Relative to the US China Annual Per Capita GDP by Region 100 80,000 90 70,000 80 60,000 70 50,000 60 RMB 50 40,000 40 30,000 30 20,000 20 10 10,000 0 0…
  35. Global Metals and Mining Conference – Teck Resources Limited – slide 35
    Room for Further Development in China 2 Urbanization Rate Comparison China Annual Urbanization Rate 100 60% 90 80 50% 70 % of Total Population 40% 60 50 30% % 40 20% 30 20 10% 10 0 0% 1950 1955 1960…
  36. Global Metals and Mining Conference – Teck Resources Limited – slide 36
    Room for Further Development in China 3 Capital Stock Per Capita Chinese Railways Remain Crowded (US at constant 2005 prices) 140 6 40 120 US (Thousands) 100 80 35 5 60 40 30 20 0 4 25 Thousand kilometers 2010…
  37. Global Metals and Mining Conference – Teck Resources Limited – slide 37
    Global Urbanization China and India Leading the Way Despite Chinas rapid urbanization over Urbanization Rates the past decade (to 54.77% in 2014), it is 90% still lower than the Western world who are 80% all 80% 70% - Chinas…
  38. Global Metals and Mining Conference – Teck Resources Limited – slide 38
    Steelmaking Coal Business Unit & Markets
  39. Global Metals and Mining Conference – Teck Resources Limited – slide 39
    Global Hot Metal Production A Look Back and Forward Hot Metal Production Growth 1,350 Chinas hot metal production continues 1,150 to grow - 2004: 258 Mt 950 - 2014: 712 Mt, representing 2.5x the 2004 level and 60% of global…
  40. Global Metals and Mining Conference – Teck Resources Limited – slide 40
    Steel Production Growing Globally Monthly Steel Production 75 65 China Traditional Steel Markets 55 45 China slower growth 16 EU Japan stable 14 12 South Korea good growth Mt 10 Japan 8 USA Outside of Asia 6 South…
  41. Global Metals and Mining Conference – Teck Resources Limited – slide 41
    Chinese Steel Industry Moving to the Coast 900 70% 800 65% 700 600 60% Heilongjiang 500 Ansteel Baiyunquan Project 55% Mt Phase 1 ( 5.4 Mt pig iron, 5.2 Mt crude 400 Jilin steel and 5 Mt steel products) in 2013. 300…
  42. Global Metals and Mining Conference – Teck Resources Limited – slide 42
    Chinas Domestic Coking Coal Production Chinas Domestic Coking Coal Production 2013-2014 60 20% Annual production flat at 530 Mt 50 15% Shanxi coal production to be 40 limited in future 10% Environment pressures Mt 30 5%…
  43. Global Metals and Mining Conference – Teck Resources Limited – slide 43
    Further Cuts Needed in the Coal Market Seaborne Metallurgical Coal Margin Curve at Spot Price of US115/t 30 Mt of production cuts announced - Slightly less than half Teck implemented by year end Margin curve shows around one…
  44. Global Metals and Mining Conference – Teck Resources Limited – slide 44
    Growing Steelmaking Coal Imports to China China's Coking Coal Imports China Rolling 12-Month Coking Coal Imports and Stock Change at Ports 100 2019F1: 96 Mt 70 90 60.0 60 80 50 47.7 70 60 40 Mt Mt 50 30 40 30 20…
  45. Global Metals and Mining Conference – Teck Resources Limited – slide 45
    We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide High quality, consistency, reliability, long-term supply Asia excl. China North 50% America Europe China 5% 15% 25% Latin America 5% 47 Source:…
  46. Global Metals and Mining Conference – Teck Resources Limited – slide 46
    Premium Steelmaking Coal Product Hard Coking Coal Benchmark Price 88% Average realized price discount to benchmark is a function of: 350 96% 93% 1. Product mix: over 90% is hard 300 coking coal 250 94% 92% 2. Carry over sales…
  47. Global Metals and Mining Conference – Teck Resources Limited – slide 47
    Coking Coal Strength High Quality Hard Coking Coal 80 U.S.A. Around the world, and Canada Other Australia Teck HCC (hard coking) especially in China, blast 70 Australia Japan and Canada furnaces are getting larger South…
  48. Global Metals and Mining Conference – Teck Resources Limited – slide 48
    Steelmaking Coal Costs Total Cash Cost 2015 vs. 2014 120 2014 2015E* 105 (US/t) (1.10 (1.25 100 CAD/USD) CAD/USD) 89 Site1 49 41 80 Transportation 35 31 US/t 60 IFRS Total 84 72 40 IFRS Capitalized Stripping 15 15…
  49. Global Metals and Mining Conference – Teck Resources Limited – slide 49
    Capacity Grown to 28 Mt Material Moved Quarterly Coal Production 80 8 7 70 6 Millions of BCM Million Tonnes 60 5 4 50 3 2 40 1 30 0 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11…
  50. Global Metals and Mining Conference – Teck Resources Limited – slide 50
    Potential for Further Capacity Growth Potential Production Increase Scenarios Given Tecks large resource base, 50 there are a number of options available or under study to allow 40 production growth as the market requires:…
  51. Global Metals and Mining Conference – Teck Resources Limited – slide 51
    75 Mt of West Coast Port Capacity Planned Teck Portion at 40 Mt Westshore Terminals Teck is largest customer at 19 Mt West Coast Port Capacity Large stockpile area 40 Recently expanded to 33 Mt Planned growth to 36 Mt 35 3 30…
  52. Global Metals and Mining Conference – Teck Resources Limited – slide 52
    LNG for Haul Trucks Project Pilot project underway to evaluate running Teck haul trucks on a blend of diesel and LNG - Expected to be running in 2015 Has the potential to reduce our haul truck fleet fuel bill by 27M annually and…
  53. Global Metals and Mining Conference – Teck Resources Limited – slide 53
    Copper Business Unit & Markets
  54. Global Metals and Mining Conference – Teck Resources Limited – slide 54
    Copper Prices & Stocks LME Daily Copper Prices & Stocks 500 1000 400 800 thousand tonnes US/lb 300 600 200 400 100 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to…
  55. Global Metals and Mining Conference – Teck Resources Limited – slide 55
    Copper Concentrate TC/RC Copper Concentrate TC/RC 60 50 TC/RC Nominal US/lb 40 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to Spot Realised TC/RC January…
  56. Global Metals and Mining Conference – Teck Resources Limited – slide 56
    Copper Production Disruptions Continue Copper Disruptions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 0 -100 -171 Thousand tonnes contained copper -200 -300 -384 -297 -400 -500 -524 -600…
  57. Global Metals and Mining Conference – Teck Resources Limited – slide 57
    China Expected to Add Almost As Much to Global Demand in the Next 15 Years as the Past 25 Years Annual Growth Rate of Chinese Copper But Will Add Significantly Consumption to Slow Dramatically in Additional Tonnage Terms 30% 1,400…
  58. Global Metals and Mining Conference – Teck Resources Limited – slide 58
    Chinas Copper Imports Remain Strong China Now Accounts for 49% of Global Copper Consumption 1,000 900 800 000s tonnes (content) 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  59. Global Metals and Mining Conference – Teck Resources Limited – slide 59
    China Copper Imports Continue to Grow Copper Concentrates Net Imports Refined Copper Net Imports 350 3,500 400 3,500 300 3,000 350 3,000 250 2,500 300 2,500 250 200 2,000 2,000 200 150 1,500 1,500 150 100 1,000 100 1,000 50 500 50…
  60. Global Metals and Mining Conference – Teck Resources Limited – slide 60
    Zinc Business Unit & Markets
  61. Global Metals and Mining Conference – Teck Resources Limited – slide 61
    Zinc Prices & Stocks LME Daily Zinc Prices & Stocks 250 1,400 1,200 200 1,000 thousand tonnes US/lb 150 800 600 100 400 50 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015…
  62. Global Metals and Mining Conference – Teck Resources Limited – slide 62
    Zinc Treatment Charges Zinc Spot TCs vs. Realized Annual TCs 600 500 400 US/dmt 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to Spot Annual Realised January 2015 64 Source:…
  63. Global Metals and Mining Conference – Teck Resources Limited – slide 63
    65 -600 -500 -400 -300 -200 -100 0 Century Rampura Agucha Lisheen Perseverance Red Dog Pomorzany 2013-2017 Brunswick Zyryanovsk Mae Sod Paragsha Angas Source: ICSG, Wood Mackenzie Teck, Company Reports…
  64. Global Metals and Mining Conference – Teck Resources Limited – slide 64
    Future Potential for Zinc Consumption % Galvanized Steel of Crude Production In 2014 China produced over 822 20% 19% million tonnes of crude steel and 52 18% million tonnes of galvanized steel sheet 16% 14% In 2014 the US produced…
  65. Global Metals and Mining Conference – Teck Resources Limited – slide 65
    Energy Business Unit & Markets
  66. Global Metals and Mining Conference – Teck Resources Limited – slide 66
    Diesel & Crude Oil Prices Diesel Prices vs. WTI Prices 2007-2014 160 Average Diesel Premiums: 120 2007-2014: C0.22/litre 2011-2014: C0.27/litre 140 100 120 80 WTI (US/bbl) 100 CAD cents/L 80 60 60 40 40 20 20…
  67. Global Metals and Mining Conference – Teck Resources Limited – slide 67
    Declining Drilling Activity Will Impact Production North American Weekly Oil Rig Count Surge in supply last 5 2,000 years primarily due to US shale oil Shale oil field decline Oil Rigs rates 25% to 50%, 1,500 compared to…
  68. Global Metals and Mining Conference – Teck Resources Limited – slide 68
    The Real Value of Long-Life Assets Fort Hills Project Indicative Rolling NPV1 Significant value created over long term 60% of PV of cash flows beyond year 5 IRR of 50-year project is only 1% higher than a 20- year project…
  69. Global Metals and Mining Conference – Teck Resources Limited – slide 69
    Building An Energy Business Strategic diversification Large truck & shovel mining projects World-class resources Long-life assets Mining-friendly jurisdiction Competitive margins Minimizing execution risk Tax effective Mined…
  70. Global Metals and Mining Conference – Teck Resources Limited – slide 70
    World Class Energy Reserves & Resources Bitumen Reserves Tecks Share World-Class (million bbl) Energy Proved Reserves & Resources Probable Proved Plus Probable 1 Fort Hills 414 194 608 Contingent Bitumen Resources2 Project Tecks…
  71. Global Metals and Mining Conference – Teck Resources Limited – slide 71
    Fort Hills Is One of the Best Undeveloped Oil Sands Mining Leases Strip Ratio vs. Ore Grade 3 billion bbls of proven plus probable 12 reserves of bitumen - Production 180,000 barrels per day (bpd) of bitumen 11.5 Fort Hills -…
  72. Global Metals and Mining Conference – Teck Resources Limited – slide 72
    Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects Legacy Oil Sands Mining Projects (30 Years Ago) Diluted Bitumen Synthetic Oil (Doesnt meet commercial pipeline specs) Naphtha froth treatment process Mine &…
  73. Global Metals and Mining Conference – Teck Resources Limited – slide 73
    Fort Hills Project Operator Has A Proven Track Record Project Bitumen Capacity1 Suncor is the largest operator in the oil sands Millennium/North Steepbank Mine 310-330 kb/d and has been developing projects in close Firebag In Situ Stages…
  74. Global Metals and Mining Conference – Teck Resources Limited – slide 74
    Minimizing Execution Risk In The Fort Hills Project Cost-driven schedule - Cheaper rather than sooner Disciplined engineering approach Shovel Ready Global sourcing of engineering and module fabrication Suncor has completed 4…
  75. Global Metals and Mining Conference – Teck Resources Limited – slide 75
    Competitive Costs1 for Fort Hills Fully Escalated Capital Cost Per Flowing Barrel Go-Forward Capital2 Project Capital: C13.5 billion 140 Full project cost Teck Capital: including spent to date: Costs in C Thousands per…
  76. Global Metals and Mining Conference – Teck Resources Limited – slide 76
    Bitumen Netback Calculation Model Typical Diluted Bitumen Bitumen Netback Calculation Example* (Dilbit) Blend Western Canadian Select 90 (WCS) at Hardisty 80 US75.00 C75.00 70 60 C56.50 25% 50 Diluent 40 30 75% 20 Bitumen 10…
  77. Global Metals and Mining Conference – Teck Resources Limited – slide 77
    Heavy Oil Price Differential West Texas Intermediate (WTI) & WTI-WCS Differential Western Canadian Select (WCS) Prices 120 45 40 100 35 80 30 25 US/barrel US/barrel 60 20 40 15 10 20 5 0 0 Jan-10 Jan-11…
  78. Global Metals and Mining Conference – Teck Resources Limited – slide 78
    Competitive Bitumen Margins1 Typical Bitumen Producer Low Quartile Cost Copper Mine Netback2 LME Price 56.50/bbl US2.50/lb Cash Margin 56% Cash Margin 50% 31.50 Margin US1.25 Margin Cash Costs Cash Costs 25.00 US1.25…
  79. Global Metals and Mining Conference – Teck Resources Limited – slide 79
    Logistics Solutions Planned Between Fort Hills, Edmonton and Hardisty Fort Hills Nominal Teck Mine Terminal Pipeline/Terminal Operator Capacity Capacity (kbpd) (kbpd) Northern Courier TransCanada 202 40.4 Hot Bitumen East Tank…
  80. Global Metals and Mining Conference – Teck Resources Limited – slide 80
    Multiple Options To Reach International Markets From Western Canada Common Carriage Pipeline No take or pay commitments When pipe capacity is constrained, access to capacity Markets may be apportioned and netback prices are…

From the store

Browse maps, data & reports in the Shale Experts store